Prices are continuing to drop, as supply is outrunning demand. Simple economics--short supply, higher price, big supply, lower price. What is difficult is knowing when the market will turn, due to the changes in financing by the banks, which realtors and consumers do not control--basically the Feds control availability of money. However, here in Florida, at least in the Panhandle, property values are holding steady in what would be normal circumstances. We are coming off,however, runaway prices fueled by easy money and 100 % financing. Things are returning to "normal"--which everyone knew had to happen. Work with an agent that can give you information that backs up their claims as to what an appropriate price would be, based on a good comparative analysis.

The the increased oversight and with the spotlight glaring at all things Lending, I would not be too concerned about getting an appraisal which is OVER or INFLATED to match a required refinance or new loan. Any lender who says the appraisal will NOT be an issue is one to avoid!
Interesting side note: Back when the Savings and Loan crisis gripped the country (yes, we went through this all before!!) back in the early 90's, we had the RTC (Resolution Trust Corporation) with its mission being the evaluation and liquidation of the hundreds of Savings and Loans which went belly-up due to fraudulant lending practices which hinged many times on overblown appraisals. Many of the properties where also commercial and land speculation. The RTC ended up using the SAME APPRAISERS who had initially got the OVERBLOWN appraisals to determine their CURRENT VALUE! And yes, I'm sure it made for some rather interesting conversations.
In today's market we now have CDO's (credit debt obligations) which have no value as the loans within them are defaulting left and right. What needs to happen is another RTC. Have a government organization take all of these huge CDO's and start going through them loan by loan and find out which are performing and which are not! Which are fixed, 30 year products and which are 2/28's, 3/27's and all manner of Adjustable Rate Mortages. Rate them accordingly to type and current peformance. Then you could find out the true value and get liquidity BACK into the market. Very similiar to the old "junk bonds" you could then sell off, as per the risk assigned, those "tranches" accordingly.

Hi Kee, As a realtor in New York, I want to tell you that your concern is a valid one. Recently I had the opportunity to go and value a home that was appraised last year for an FHA loan. The appraiser had it appraised at $105,000. I did my research and arrived at the home. Immediately I knew that this young girl had been taken to the cleaners. My initial thought was that this appraiser must have been wearing blinders. So many FHA regulations were not to compliance on the property. The acreage valuation was not even considered. This was a complete "fixer-upper" that I could not value at more than $75,000 on a good day.

Now more than ever, consumers have to be sure that their agent is knowledgable on the market in which they are buying. Relying on the sources for recent sale data combined with their agents expertise will keep a consumer from overpaying. Also, we are finding in our soft market, that when a decent property comes up for sale, it may go quickly and for more than list price when others have sat on the market for extended lengths of time. It has now become crucial to know when too much is too much! Determine a "walk away" dollar. Tho I am a firm believer in the laws of supply and demand, today's market is too risky to be overpaying for a property. Keep informed!